Understanding the McConnell debt limit proposal

Coming two full days after Leader McConnell released his proposal, this post may be too late to do much good. Most of Washington seems to have processed the idea and is now fiercely debating it. Still, I found the press coverage of the Leader’s proposal to be generally confusing and inadequate, so I hope this helps clarify things for anyone who was confused by other explanations.

I will try to stay neutral as best I can in this post.

The core concept

The debt limit now works as an only if proposition: the debt limit is increased only if Congress votes affirmatively to authorize an increase. Increasing the debt limit therefore requires a majority of the House and Senate to cast a difficult ayevote, plus a Presidential signature. The McConnell proposal would invert this into an unless proposition: the debt limit would automatically be increased unless Congress voted to stop it. And by changing the key vote to a veto override, you would need only 1/3 of either the House or Senate to take a tough vote to allow the debt limit to increase.

In exchange for this significant increase in Presidential authority, the President would take most of the political heat for the debt limit increase, and he would be required to propose difficult spending cuts of an equal or greater amount.

How it would work

Before August recess, the House and Senate would pass the McConnell proposal and the President would sign it into law.

As soon as it became law, the President could ask Congress to increase the debt limit by $700 B.

The President would have to simultaneously submit a plan to cut spending by more than $700 B.

The Presidential request and submission would trigger an immediate $100 B increase in the debt limit, thus giving the Administration the ability to make it into September without having to slow down cash outlays for benefit checks or anything else.

The President’s $700 B debt limit increase request would be automatically approved unless Congress blocked it. To block it, a majority of the House and Senate would vote to disapprove. That resolution of disapproval would go to the President, who would presumably veto it. If more than 2/3 of the House and Senate overrode the President’s veto, then the $700 B request would be denied and the original $100 B authorization rescinded. This resolution of disapproval would be governed by “fast track” legislative procedures so it couldn’t be delayed, amended, or filibustered.

If either the House or Senate voted down the resolution of disapproval, or if 1/3 or more of the House or the Senate sustained a Presidential veto, then the $700 B would be automatically authorized. In other words, the President knows he will get his $700 B as long as (a) he submits his spending cuts and (b) he knows he can get 1/3 of the House or the Senate to sustain his veto, should it be necessary.

This process would be repeated in the fall of 2011 and again in the summer of 2012, with the President authorized to ask for an additional $900 B each time, again matched by a greater amount of spending cuts. The President could begin this process only when Treasury was within $100 B of the debt limit.

The authority would expire in early 2013, around the end of this Presidential term.

The biggest area of confusion

The McConnell proposal does not guarantee that spending will be cut. Congress would consider the debt limit resolution of disapproval and the President’s proposed spending cuts separately. The process is designed to bring the debt limit resolution of disapproval to a rapid vote. Congress could, however, do anything it wants (or nothing) with the President’s proposed spending cuts. The McConnell proposal guarantees that spending cuts will be proposed, and it guarantees a swift resolution to the debt limit increase. It does not guarantee any legislative conclusion on spending cuts.

Likely results

If the McConnell proposal were to become law, I would expect the following results:

All four debt limit increases would happen: $100 B in late July / early August, another $600 B in September, another $900 B in the fall of 2011, and another $900 B in mid-2012, for a total of $2.5 trillion between now and the end of 2012. If revenue forecasts hold up, that should get through the remainder of this Presidential term.

Press attention would initially focus on the President’s request. He would bear much of the political responsibility for the debt increases, as intended by the McConnell proposal.

Most Members of Congress, from both parties, would vote for the resolutions of disapproval (i.e., to disapprove the debt limit increase) each time. There is a high likelihood the President would have to veto each resolution of disapproval, then muster 1/3 of the House or Senate to sustain each veto. I assume he would be able to find the votes to sustain, possibly from both parties.

The President would, as “required” (see below), make his three spending cut proposals. There would be lots of back-and-forth over whether his proposals were real and/or legitimate.

Congressional action on the spending cut proposals is difficult to predict, but I wouldn’t hold out high hopes for these proposals to provoke significant legislative action. They would, however, create pressure for the President to be more specific than he has been up until now.

Nuances

The McConnell bill does not increase the debt limit. It authorizes the President to increase the debt limit, as long as Congress doesn’t prevent him from doing so. Thus, you as a Member of Congress could vote for the McConnell bill, then vote for the subsequent resolutions of disapproval, and honestly say that you never voted to raise the debt limit. Yet the debt limit is much more likely to be increased, given the lower success hurdle of just sustaining a veto. This political logic is core to the proposal.

This mechanism would work exactly like the TARP funding mechanism enacted in September, 2008. That TARP funding mechanism was modeled after a longstanding provision in law that governs Congress’ ability to disapprove regulations implemented by the President with a resolution of disapproval. If you are familiar with either the Congressional Review Act process (for regs) or the TARP “tranche” process, this is close to an exact copy.

Legislative & political logic behind the proposal

Under current law the debt limit does not increase unless enough Members of Congress votes “aye.” Under McConnell, the debt limit increases as long as not too many Members vote “no.” In a strange way, Members of Congress would like this vote – it would be a “free” opportunity to demonstrate they are opposed to a debt limit increase by voting no. The President (and Congressional leaders who feel a responsibility for the result) would only have to find 1/3 of the House or the Senate to take a tough vote, rather than now, where they have to find a majority in both the House and the Senate.

More fundamentally, the McConnell amendment would shift authority, power, and responsibility for a debt limit increase from the Legislative Branch to the Executive Branch. Usually the two branches of government fight to maximize their power relative to the other. Here, the Congress would be saying, “Too hot for us – you deal with it.”

This is a time-limited proposal with a specific partisan configuration in mind. All $2.5 T of debt limit increases would technically be the result of Presidential action, not Congressional action. This may explain why Democratic leaders are saying nice things about McConnell’s idea – it lets their Members off the hook just as it lets Republicans off the hook. President Obama would politically “own” the debt limit increases.

In addition, it would require (with a caveat) the President to make specific legislative proposals to cut spending deeply (note that McConnell requires “spending cuts,” rather than “deficit reduction”), something he has so far been unwilling to do. The President and his team assert that his spring budget speech and his recent closed-door negotiations constitute specific and credible proposals, while Republicans (including me) argue he has been vague and has been claiming credit for more deficit reduction than he has actually proposed. The McConnell amendment would force the President to propose spending cuts to get his debt limit increase, creating a more level playing field in an environment in which House Republicans have voted for specific pain while everyone else has basically ducked. At the same time, it’s difficult to limit the President’s ability to propose gimmicks and call them spending cuts.

The economy is weak and President Obama is taking the brunt of the blame for that. I think Leader McConnell is concerned that if the debt limit is not increased, the President will attempt to assign responsibility for that Congressional inaction and any subsequent economic bad news to Republicans. He could argue that Republicans’ irresponsibility on the debt limit is the cause of economic weakness. The McConnell proposal would preclude this scenario.

An important detail

It is difficult to draft a Constitutionally acceptable provision to require the President to make a proposal to Congress. In the past, the Executive Branch has argued that similar provisions are not legally enforceable, so there could be a concern that the President would ignore this requirement and fight it in court.

I think this could be rectified by a separate Presidential letter committing him to abide by this provision whether or not he’s required to do so. Since the McConnell proposal will pass the Senate and become law only if the President finds it acceptable, such a letter could be negotiated as a suspenders to the belt of the legislative language.

Initial reactions

This is the fascinating part. The New York Times and Wall Street Journal editorial pages both endorsed the McConnell proposal, for different reasons. That is astonishing.

POLITICO reports that many House Republicans were furious with the proposal, and that some Senate conservatives are also not onboard. The proposal could not pass the House today, but then I don’t think any debt limit proposal could pass the House today.

The National Review editorial board opposes it, preferring a debt limit increase be packaged with spending cuts. At the Weekly Standard, Bill Kristol and Stephen Hayes oppose it, while Fred Barnes supports it (I think). Leader McConnell should be pleased, in that he has support from a number of outside conservatives who, for instance, attacked Republican leaders during the spring Continuing Resolution battles.

Key Democrats, including Senate Majority Leader Reid and Senator Schumer, are signaling that they are open to Leader McConnell’s idea. It is unlikely they would be doing so without at least a private nod from the White House.

Evaluating the plan

Key to understanding the McConnell proposal is the current legislative context. Leader McConnell emphasizes that he intends this proposal as a backup plan, to be pursued only if everything else fails. Congressional Democrats are reportedly open to the idea, which means it has at least a moderate chance of becoming law. This means that, at the moment, it is the only plan that can make that claim. The question is not, then, whether or not you like the proposal. Instead, I think the relevant questions are:

Are you willing to allow the Congress to recess for August without the debt limit being increased?

If not, what other alternative can become law?

Those conservatives who answer the first question yes will probably be unsatisfied by any proposal, I think. If you are not afraid of the effects (policy or political) of Congressional inaction, you have no incentive to consider any compromise.

The other obvious alternative, assuming there is no big deal, would be to package a small, short-term debt limit increase with a similarly-sized package of spending cuts (say, $200-$300 B). I won’t be surprised if that idea starts to gain traction soon as an alternative to McConnell’s proposal